Overtime pay in India isn’t discretionary once the statutory threshold is crossed, it’s a fixed rate set by law, currently in a genuine transition as the older Factories Act framework gets absorbed into the newer labour codes.

The rate and the hour caps

The statutory overtime rate is twice the ordinary rate of wages, unchanged through this transition. What has changed is the daily threshold: under the Factories Act, 1948, the daily cap was 9 hours before overtime applied. That Act has now been consolidated into the Occupational Safety, Health and Working Conditions Code, 2020, in force since 21 November 2025, which sets the daily threshold at 8 hours instead. The weekly cap remains 48 hours, and overtime applies to whichever basis, daily or weekly, actually triggers first.

Quarterly overtime caps are genuinely unsettled right now, with different sources citing different figures as the central rules under the new Code continue to be finalised. Rather than quote a specific quarterly limit that may already be out of date, check the current state limit directly if this affects your payroll calculations, since it varies and is still moving.

Who’s actually covered

The overtime provisions apply to workers as defined under the relevant code, generally excluding managerial and supervisory staff above a certain wage threshold. White-collar salaried employees in many companies don’t fall under statutory overtime at all, which is why overtime pay is much more consistently applied in manufacturing, factory and shift-based blue-collar roles than in typical office employment.

Frequently asked questions

Does every employee get statutory overtime pay?

No. Coverage depends on whether you’re classified as a “worker” under the applicable code, which generally excludes managerial and supervisory roles above a wage threshold, not on whether you happen to work extra hours.

Is overtime pay taxable?

Yes, it’s added to salary income and taxed the same way as regular pay.

Has the 2x overtime rate itself changed under the new codes?

No, the doubled-rate principle has carried through from the Factories Act into the OSH Code unchanged. What moved is the daily hour threshold that triggers it.

Calculate an overtime payout with the Overtime Pay Calculator, and see team-level cost with the Overtime Cost Calculator.